Means testing

Greater targeting of benefits on low-income groups does not lead to a smaller reduction in poverty and inequality, contrary to one influential theory, according to a new paper from the Institute for the Study of Labor in Bonn. The authors tested the theory, originally advanced by two Swedish academics (Walter Korpi and Joakim Palme) in 1998, using the latest available data.

The welfare state in its existing form will become unsustainable over the next few decades, according to a report by a Conservative MP. Writing for the right-of-centre Free Enterprise Group, Chris Skidmore calls for fundamental reform of the benefits system.

Older people need to shoulder a bigger share of public spending cuts, according to an influential Conservative MP.

Nick Boles is reported to have played an important role in drafting Tory policy plans before the 2010 election. In a speech on living standards and public spending, Boles called for older people’s universal benefits to be means-tested by the next government (after 2015). These include free bus passes, health prescriptions, winter fuel allowance and television licences.

Boles explained that at least a further £8.5 billion needs to be cut from the £145 billion social security budget, on top of cuts already planned. Further cuts should be concentrated on benefits that do not help people improve their skills or get back into work. That means targeting housing benefit, child tax credit and child benefit, as well as benefits for older people.

The paper welcomes the initiative to set out a child poverty strategy, and its recognition that addressing these issues requires a long-term and wide-ranging strategy as well as a commitment to monitor this strategy with targets and indicators. The paper, however, notes a disjunction between the overall universalist aims stated in the strategy and the targeted approach of the strands set out to implement the strategy. The paper also notes that the narrow focus on tackling worklessness is insufficient.

Consultation has started on draft regulations designed to introduce the new universal credit system – a key part of the government’s strategy for social security reform.

The universal credit will replace a wide range of existing benefits including income support, income-based jobseeker’s allowance/employment and support allowance, housing benefit, working tax credit and child tax credit. It will be phased in from October 2013 onwards and, when fully implemented by 2017, will cover around 12 million claimants.

This paper presents indicators relating to public and private services, focusing particularly on services relating to health, services for specific groups such as elderly, disabled and young people and public transport. Although many such services are ostensibly ‘universal’, both the quality and the quantity of services are typically lower in poor areas, and families in poverty may face additional barriers when accessing services. This paper argues that there is a need for some innovation in the public and private service questions on the PSE survey due to the changing nature of public service provision.

LSE researchers have warned about the spread of new means tests devised by local bodies. They say the tests are the combined result of spending cuts, efforts to protect low-income groups from some of their effects, and the general trend towards ‘localised’ decision making.

The researchers investigated the examples of means-tested support offered to students in England applying to go to university from autumn 2012. The support is designed partly to offset the rise in general fees.

In an interview with the Guardian, the American sociologist David Brady argues that ‘targeting benefits at the very poorest people won’t effectively reduce poverty’. ‘No affluent democracy has achieved relatively low poverty without robust social policy’, he says.

Brady, the author of Rich Democracies, Poor People: How Politics Explain Poverty (Oxford University Press, 2009) says we need to rebuild trust in a welfare state that everyone feels they benefit from. The problem he sees developing in Britain is similar to the situation that exists in the USA, where welfare is now only for the very poorest people. ‘The more [that] “welfare” is a broad portfolio of social policy to help people across the life span, the more effective it is at reducing poverty.’

A well-designed child benefits system can play a crucial role in tackling poverty among lone mothers – and in strengthening women’s autonomy – according to researchers in Antwerp studying the impact of child benefits on the poverty risk of lone mothers in 15 European countries.

Welfare systems targeted on the poor are less effective at reducing poverty than more universal systems finds the Fabian Society and the Webb Memorial Trust in their report, The Coalition and Universalism: Cuts, targeting and the future of welfare. Using an analysis of international data, the report shows that increased targeting of welfare harms the poor families it is intended to help, and that reducing the extent of universal provision erodes public support for welfare spending, leading to a reduced help for those who need it most. The report notes that these findings are highly counter-intuitive:

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PSE:UK is a major collaboration between the University of Bristol, Heriot-Watt University, The Open University, Queen's University Belfast, University of Glasgow and the University of York working with the National Centre for Social Research and the Northern Ireland Statistics and Research Agency. ESRC Grant RES-060-25-0052.